Through a critique of existing financial theory underlying current accounting practices, and reapplication of this theory to a broad group of stakeholders, this paper lays a normative foundation for a revised perspective on the responsibility of the public accounting profession. Specifically, we argue that the profession should embrace the development of standards for reporting information important to a broader group of stakeholders than just investors and creditors. The FASB has recently moved in the opposite direction. Nonetheless, an institution around accounting for stakeholders continues to grow, backed by a groundswell of support from many sources. Based on institutional theory, we predict that this institution and the forces supporting it will cause changes in the public accounting profession, even if through coercion. We also provide examples of stakeholder accounting, building from the premise that a primary responsibility of accounting is to provide information to address the risk management needs of stakeholders."> Through a critique of existing financial theory underlying current accounting practices, and reapplication of this theory to a broad group of stakeholders, this paper lays a normative foundation for a revised perspective on the responsibility of the public accounting profession. Specifically, we argue that the profession should embrace the development of standards for reporting information important to a broader group of stakeholders than just investors and creditors. The FASB has recently moved in the opposite direction. Nonetheless, an institution around accounting for stakeholders continues to grow, backed by a groundswell of support from many sources. Based on institutional theory, we predict that this institution and the forces supporting it will cause changes in the public accounting profession, even if through coercion. We also provide examples of stakeholder accounting, building from the premise that a primary responsibility of accounting is to provide information to address the risk management needs of stakeholders."> Through a critique of existing financial theory underlying current accounting practices, and reapplication of this theory to a broad group of stakeholders, this paper lays a no">
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Responsible Accounting for Stakeholders

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  • Jeffrey S. Harrison
  • Joyce van der Laan Smith
Abstract
type="main"> Through a critique of existing financial theory underlying current accounting practices, and reapplication of this theory to a broad group of stakeholders, this paper lays a normative foundation for a revised perspective on the responsibility of the public accounting profession. Specifically, we argue that the profession should embrace the development of standards for reporting information important to a broader group of stakeholders than just investors and creditors. The FASB has recently moved in the opposite direction. Nonetheless, an institution around accounting for stakeholders continues to grow, backed by a groundswell of support from many sources. Based on institutional theory, we predict that this institution and the forces supporting it will cause changes in the public accounting profession, even if through coercion. We also provide examples of stakeholder accounting, building from the premise that a primary responsibility of accounting is to provide information to address the risk management needs of stakeholders.

Suggested Citation

  • Jeffrey S. Harrison & Joyce van der Laan Smith, 2015. "Responsible Accounting for Stakeholders," Journal of Management Studies, Wiley Blackwell, vol. 52(7), pages 935-960, November.
    • Handle: RePEc:bla:jomstd:v:52:y:2015:i:7:p:935-960
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    2. Michelon, Giovanna, 2021. "Accounting research boundaries, multiple centers and academic empathy," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 76(C).
    3. Ronald K. Mitchell & Harry J. Van Buren III & Michelle Greenwood & R. Edward Freeman, 2015. "Stakeholder Inclusion and Accounting for Stakeholders," Journal of Management Studies, Wiley Blackwell, vol. 52(7), pages 851-877, November.
    4. Simona Fiandrino & Alberto Tonelli, 2021. "A Text-Mining Analysis on the Review of the Non-Financial Reporting Directive: Bringing Value Creation for Stakeholders into Accounting," Sustainability, MDPI, vol. 13(2), pages 1-18, January.
    5. Sheehan, Norman T. & Vaidyanathan, Ganesh & Fox, Kenneth A. & Klassen, Mark, 2023. "Making the invisible, visible: Overcoming barriers to ESG performance with an ESG mindset," Business Horizons, Elsevier, vol. 66(2), pages 265-276.
    6. Charlie Lindgren & Asif M. Huq & Kenneth Carling, 2021. "Who Are the Intended Users of CSR Reports? Insights from a Data-Driven Approach," Sustainability, MDPI, vol. 13(3), pages 1-20, January.
    7. Josh Wei-Jun Hsueh, 2018. "Governance Structure and the Credibility Gap: Experimental Evidence on Family Businesses’ Sustainability Reporting," Journal of Business Ethics, Springer, vol. 153(2), pages 547-568, December.

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